CTA Reaches Agreement for Development of Block 37

April 13, 2005
4/13/05

The Mills Corporation Slated to Build CTA Subway Station and Proposed Airport Check-In Facility

The Chicago Transit Board today approved a $94.3 million agreement with The Mills Corporation to finance and develop a transit center under Block 37, also known as 108 North State Street. Plans include a new subway station, track connections and a common downtown airport check-in facility for train service to both O'Hare and Midway airports.

"This formal agreement represents CTA's commitment to enhance rail service to both airports as well as improvements for CTA Blue and Orange Line customers," said Chicago Transit Board Chairman Carole Brown. ?Providing rail service to both airports will contribute to Chicago's reputation as an easy to navigate city for residents and tourists, and it will provide additional revenue for operation throughout the region."

?The CTA is excited to have this unique opportunity to build a station at Block 37," said CTA President Frank Kruesi. ?This agreement with The Mills Corporation ensures that the development will include a station with connections to Chicago's airports meaning more flexibility and more service options for both area residents and visitors to the region."

The City of Chicago has reached a formal agreement with The Mills for the overall redevelopment of the site. Subsequent phases of the project will proceed as funding becomes available.

The overall cost of the transit center is estimated at $213.3 million of which The Mills would pay $40.9 million. The remaining $172.4 million is expected to be funded by the CTA and the City of Chicago. The CTA has allocated $130 million in capital funds generated from the issuance of revenue bonds to fund capital improvement projects throughout the CTA. The City of Chicago will provide $42.4 million in Tax Increment Financing (TIF) revenue for the remaining expenses. The Mills will build the new CTA station within Block 37, and CTA contractors will build short underground structures to connect the development site with the adjacent Red and Blue Line tunnels.

The Board also approved an intergovernmental agreement between the City of Chicago and the CTA for the $42.4 million in TIF funds specifically for expenses related to the track and tunnel connections.

As a public/private project, the transit terminal is eligible for low-cost, long term financing through the U.S. Department of Transportation's Transportation Infrastructure Finance and Innovation Act (TIFIA). The CTA submitted a letter of interest to the TIFIA program, formally initiating the process for securing a low interest loan under this program. With a formal agreement between the CTA and The Mills now in place, both entities will prepare a formal application for TIFIA credit assistance in accordance with USDOT's guidelines. As The Mills? financing plans are developed, CTA will work with The Mills and CTA's financial advisors to structure a TIFIA financing plan that maximizes benefits for all parties.

Because it is the only vacant parcel between CTA's Dearborn and State subways, the Block 37 site makes possible a track connection project that would otherwise be prohibitively expensive. By comparison, the recently completed temporary World Trade Center subway station for Port Authority Trans-Hudson (PATH) trains in New York City cost $300 million, and the estimated cost for the planned permanent center is $2 billion. Lower Manhattan's underground Fulton Street Transit Center project is projected to cost $800 million.

The City of Chicago is the owner of the land and has chosen Mills Limited Partnership and its affiliate, Block 37 LLC, as the developer of the tract.

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